The World Economic Forum annual meeting opened in Davos, Switzerland on Monday morning, with as grim a message as the elite gathering has heard in many years.
In the three-day summit’s opening address, Ukraine’s president Volodymyr Zelensky, dressed in his trademark wartime olive-green T-shirt, and projected on monitors from Kyiv, told about 1,000 CEOs and government officials that Ukraine needs $5 billion a month, beginning immediately, in order to stave off full-blown economic collapse—a collapse that would have deep global ramifications.
“The amount of work is enormous,” he said. “We have more than a half a trillion dollars in losses, and tens of thousands of facilities destroyed. We need to rebuild entire cities and industries.”
Yet rather than describing the dire situation as a crisis, Zelensky cast it as a potentially lucrative opportunity for Western countries and companies.
“Patronage” for investors
Zelensky said Ukraine would have a “special, historically significant model of rebuilding,” in which companies and countries could choose a specific region or mine to rebuild. This system, which he called a “patronage,” is meant as a way of attracting the world’s top engineers and architects to Europe’s biggest reconstruction since the aftermath of the Second World War, nearly 80 years ago.
“We face multiple challenges,” he said. “Parallel to that, our national economy has to remain operative.”
Keeping Ukraine’s economy ticking is a daunting project amidst the most devastating war in Europe since the 1940s.
The World Bank estimated last month that Ukraine’s GDP will plunge about 45% this year, and the International Monetary Fund estimates that the country’s balance of payments shortfall for just the first six months of this year will total about $15 billion.
In a separate report last month, the Center for Economic Policy Research in London estimated that rebuilding Ukraine will cost hundreds of billions of dollars—far exceeding the U.S. Marshall Plan in the 1940s and 1950s, which helped rebuild Europe’s shattered cities after the Second World War.
Portfolio down 50%
There are also less visible, longer-term worries.
In an interview last month, Andrii Dligach, founder of the Center for Economic Recovery in Kyiv, told Coins2Day that more than 10% of Ukraine’s businesses had left the country since Russia invaded on February 24. “They probably will not come back in the near future,” he said. “It is a major loss.”
On stage in Davos, Julia Kiryanova, CEO of Smart Holding, a strategic investment company in Kyiv, said the firm’s portfolio was down about 50% since the war began three months ago.
Ukraine’s steel output, she said, had plummeted from about 23.5 million tons last year, to about 8 million tons this year—and much of which is struggling to be exported, since Russia has largely seized the Black Sea ports, or laid explosive mines nearby, rendering them unusable.
Kiryanova said the country’s huge grain exports has likewise been pummeled. Corn production was down about 54% and wheat had dropped about 35%, she said. “We have lost 68% of arable land,” she added.
On stage in Davos, Ukraine’s Economy Minister Yulia Svyrydenko said that the loss of the Black Sea ports had been a huge blow to the export-oriented country.
“We are under attack every day,” she said. “But we have not given up.”
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